Correlation Between Eisai and AMBRA SA

Can any of the company-specific risk be diversified away by investing in both Eisai and AMBRA SA at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Eisai and AMBRA SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eisai Co and AMBRA SA A, you can compare the effects of market volatilities on Eisai and AMBRA SA and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Eisai with a short position of AMBRA SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eisai and AMBRA SA.

Diversification Opportunities for Eisai and AMBRA SA

-0.56

Correlation Coefficient

Eisai  AMBRA SA

Excellent diversification

The 3 months correlation between Eisai and AMBRA is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Eisai Co and AMBRA SA A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMBRA SA A and Eisai is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Eisai Co are associated (or correlated) with AMBRA SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMBRA SA A has no effect on the direction of Eisai i.e., Eisai and AMBRA SA go up and down completely randomly.

Pair Corralation between Eisai and AMBRA SA

Assuming the 90 days horizon Eisai Co is expected to under-perform the AMBRA SA. But the stock apears to be less risky and, when comparing its historical volatility, Eisai Co is 1.09 times less risky than AMBRA SA. The stock trades about -0.13 of its potential returns per unit of risk. The AMBRA SA A is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  449.00  in AMBRA SA A on September 27, 2024 and sell it today you would earn a total of  51.00  from holding AMBRA SA A or generate 11.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Eisai Co  vs.  AMBRA SA A

Eisai

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eisai Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

AMBRA SA A

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AMBRA SA A are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AMBRA SA reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eisai and AMBRA SA

The main advantage of trading using opposite Eisai and AMBRA SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eisai position performs unexpectedly, AMBRA SA can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in AMBRA SA will offset losses from the drop in AMBRA SA's long position.

The idea behind Eisai Co and AMBRA SA A pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.